how many years to retirement which qualified plan is right for you l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
How Many Years to Retirement? Which Qualified Plan Is Right for You? PowerPoint Presentation
Download Presentation
How Many Years to Retirement? Which Qualified Plan Is Right for You?

Loading in 2 Seconds...

play fullscreen
1 / 12

How Many Years to Retirement? Which Qualified Plan Is Right for You? - PowerPoint PPT Presentation


  • 193 Views
  • Uploaded on

How Many Years to Retirement? Which Qualified Plan Is Right for You?. Castle Financial Advisors, LLC Like the Knights of Olde, Our Advisors Pledge to Help You Build & Fortify Your Financial Castle. Two Types of Qualified Plans. Defined Contribution. Defined Benefit.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'How Many Years to Retirement? Which Qualified Plan Is Right for You?' - Jimmy


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
how many years to retirement which qualified plan is right for you

How Many Years to Retirement? Which Qualified Plan Is Right for You?

Castle Financial Advisors, LLC

Like the Knights of Olde, Our Advisors Pledge to Help You Build & Fortify Your Financial Castle.

age is not the only factor

Two Types of Qualified Plans

Defined Contribution

Defined Benefit

Age is not the Only Factor
  • Traditional 401(k) Plans
  • Safe Harbor 401(k) Plans
  • Traditional Profit Sharing Plan
  • Age-Weighted PS Plan
  • New Comparability PS Plan
  • Traditional Defined Benefit Plans
  • Fully Insured 412i Defined Benefit Plans
  • Defined Benefit / Defined Contribution
  • Floor Offset Defined Benefit Plans
  • New Comparability Defined Benefit Plans
what is your annual plan budget
What is Your Annual Plan Budget?

Defined Contribution Plans

  • Participant Receives Account Balance at Retirement Annual
  • Contribution = Usually % of Current Salary
  • Maximum Annual Contribution for each participant is the lesser of $41,000* or 100 % of salary for 2004 and thereafter
  • May favor younger or older employees based upon plan design

Define Benefit and 412(i) Fully Insured Plans

  • Pension at Retirement = Set by Plan Formula
  • Annual Contribution is Amount Needed Each Year to Provide Pension at Retirement
  • No Dollar Limit on Annual Contribution
  • Maximum Dollar Limit on Pension Benefit Lesser of 100% Salary* or $165,000*
  • Typically favors older employees
  • *Dollar Amount indexed and may increase each year.
safe harbor 401 k plans what are they
Safe Harbor 401(k)PlansWhat Are They?
  • Non Discrimination Tests Waived
    • No ADP/ACP Tests
    • Owner Can Defer Up to Maximum Limit
      • Regardless of Amount of Employees’ Deferrals
  • Must Provide One of the following Safe Harbor Contributions
    • Either Non-elective Contribution
      • 3% Compensation To All Eligible Employee
    • Matching Contribution
      • 100% First 3% Compensation Deferred plus
      • 50% Next 2% Compensation Deferred
  • No Minimum Top Heavy Contributions Required!
traditional profit sharing 401 k plans what are they
Traditional Profit Sharing/401(k)PlansWhat Are They?
  • Traditional Profit Sharing Plan
    • Contribution of 0 to 25% Plan Payroll
      • No Profits Necessary
      • Can Change Contribution Each Year
    • Allocation – in Proportion to Salary
      • No Age Weighting
  • 401(k) Element
    • Elective Deferral - $13,000* in 2004
    • Catch-Up Contribution - $3,000* in 2004
      • Allowed for Those Age 50 & Older
    • Max. Allocation for Individual
      • $44,000** in 2004 if Age 50 or Older
      • $41,000** in 2004 if Under Age 50
  • *Scheduled increases through 2006 & indexed for inflation after 2006
  • **Indexed for inflation
new comparability profit sharing plans what are they
New Comparability Profit Sharing PlansWhat Are They?
  • Non Discrimination Test - Cross Testing
    • Test Defined Contribution Plan as Defined Benefit Plan
    • Project Contributions to Retirement
    • Convert Accumulated Contributions to Monthly Benefit
    • Designed to Provide older groups of Employees a Larger Benefit
  • Plan Contribution Levels May Be Customized
    • Preferred Employees may receive a Higher Contribution
    • Rank & File Employees may receive a Lower Contribution *
    • Each Year based upon Plan Budget & Census Information
    • 401(k) Element may be added to Maximize Contributions
    • Allocation Levels Based on Job Classifications

The Minimum employee contribution permitted is typically 5 percent

slide7

New Comparability Profit Sharing Plans

Customized Allocations

Traditional PSP New CompPSP

AgeSalaryContributionContribution

Owner 60 205,000 41,000* 20% 41,000* 20%

Owner 54 150,000 30,000 20% 41,000* 27%

Mgr 50 80,000 16,000 20% 8,000 10%

EE 1 35 35,000 7,000 20% 1,750 5%

EE 2 34 30,000 6,000 20% 1,500 5%

EE 3 24 25,000 5,000 20% 1,250 5%

Totals $105,000 $94,500

Both Owners Get Same Contribution

Manager Receives Higher Contribution Rate than Other Employees

*2004 maximum allocation, indexed for inflation & may increase in future

defined benefit plans for maximum plan contributions
Defined Benefit PlansFor Maximum Plan Contributions!
  • Client Profile
    • Ages 45-85
    • Relatively Stable Profits
  • Employees
    • Relatively Few Employees
    • Relatively Young Employees
  • Client Goals
    • Maximum
      • Contributions/Deduction
      • Benefits
    • Sustained Plan Contributions
    • Totally Flexible Contributions not Important
412 i plans advantages for older business owners
412(i) PlansAdvantages for Older Business Owners
  • Highest Possible
    • Contribution/Deduction
    • Benefits
    • Death Benefits
  • Highest Security
    • Benefits Guaranteed
    • Totally Recession Proof
  • No Investment Fund
    • Guaranteed Interest Rate
    • No Stock Market Investments
slide10

Comparison of Qualified Plans

First Year Contributions

Defined Defined

Contribution* Benefit*

412i

Plan*

Att Age/

Ret Age

45/62 41,000 80,278 164,970

50/62 44,000 133,131 258,019

55/62 44,000 211,448 395,634

60/65 44,000 236,910 450,112

*Assumes maximum contributions & maximum life insurance for 2004. Traditional Defined Benefit uses Guardian Life PTWL100 Pref, 412(i) uses Guardian Life PTWL3 Pref. & PTAPRA-3F

a qualified retirement plan is available for you
A Qualified Retirement Plan is Available for You!

Defined Contribution Plans

    • 401(k) Savings Plans
      • Excellent Employee Contributory Plan
    • Traditional Profit Sharing Plans
      • Ideal for One-Person Plans
    • Age-Based Profit Sharing Plans
      • Each Age Has Separate Allocation Level
    • New Comparability Profit SharingPlans
      • Different Allocation Levels for Different Groups
  • Defined Benefit Plans
    • 412(i) Plans
      • Highest Possible Contributions
    • Traditional Defined Benefit Plans
      • High Contributions with More Flexibility
slide12

The information in this presentation is designed to be general in nature and for educational purposes only. Castle Financial Advisors, its agents and employees do not give tax or legal advice.